A statewide class action has been filed in Illinois against credit giant Experian Information Services as a result of allegedly fraudulent activities revolving around Experian's offer of free credit reports through its consumerinfo.com website. According to consumers, the offer a "free" credit report is, in fact, a scam to get consumers to sign up for Experian's $79.95 CreditCheck service. The action is brought on behalf of all residents of the state of Illinois who, since November 5, 2000, utilized Experian's offer for a free credit report by entering their credit card or debit card information, and who were charged for Experian's CreditCheck service as a result and have not received a full refund of charges for this service. The action is brought under Illinois consumer protection statutes and seeks unspecified compensatory damages, injunctive and declaratory relief as well as disgorgement of all profits and compensation obtained by the defendants through their alleged fraudulent activities.

The action is brought as a result of what Illinois consumers allege is an intentionally fraudulent and deceptive practice on the part of Experian acting through its consumerinfo.com website. According to the consumers, Experian offers a "free" credit report on its consumerinfo.com website. However, in order to obtain the credit report, consumers allegedly must provide Experian with their credit/debit card information. Once the consumer has provided this information, they are apparently enrolled in Experian's "CreditCheck" service and automatically billed $79.95 annually for the service. Consumers allege that this is a deceptive "negative option sales plan" aimed at enrolling unwitting consumers in a service that is not adequately explained when consumers request a free credit report. The use of the word "free" in commerce is strictly
regulated by the Federal Trade Commission (FTC). Under the rules promulgated by the FTC, whoever offers a "free" promotion must exercise extreme care as to not mislead consumers. A company making a "free" offer must clearly and conspicuously explain all of the material terms, conditions and obligations upon which receipt and retention of the "free" item is contingent. This standard is so high that in order to pass muster, the terms, conditions and obligations must be explained so as to leave no reasonable probability that the terms of the offer might be misunderstood by the average consumer. According to the consumers, this standard also applies to negative option sales plans, or sales plans that provide services or goods without the consumer receiving prior announcements from sellers describing the goods or services and without receiving pre-notification forms.

The consumers allege that the enrollment in the CreditCheck service runs afoul of the FTC regulations and Illinois consumer protection laws because Experian does not clearly and conspicuously disclose the fact that consumers will be enrolled in this service if they request a "free" credit report. According to the consumers the website does not clearly disclose the following: (1)The fact that by accepting the "free" credit report, consumers are actually signing up for a pay service; (2)how much time a consumer has to cancel before they are obligated to pay $79.95; (3)the cost the consumer will incur if they do not cancel within the 30 day trial period; (4)whether the consumer will be charged a non-refundable membership fee if they do not cancel the service within the 30-day trial period; and (5)whether the fees will be charged automatically to the credit card the consumer used to order the "free" credit report. According to the consumers, Experian buries the fact that consumers are being charged $79.95 for a service they likely don't want when they request a free credit report. According to the consumers, information that they are being charged for a service does not appear until several web pages have been viewed and when it does appear the text is very small and overshadowed by the words "Money Back Guarantee". Additionally, consumers allege that under Illinois law, the offer of the "free" report constitutes fraud because the report is not actually free, it requires consumers to enroll in a service that is provided for a fee. Finally, the consumers allege that Experian's offer to deliver a full set of three credit reports from the leading reporting services constitutes fraud because the three reports are never actually provided.

According to the consumers, all of these actions amount to unjust enrichment for Experian and were willfully calculated to defraud consumers and bilk them of $79.95. This case was originally filed in Illinois state court, but was removed by the defendants to Illinois federal court.